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Canadian Solar flies high in 2013

By Sam Eifling

December 19, 2013

Canadian Solar Inc. is getting notice as this year's top-performing solar energy company on the NASDAQ, largely because of its contracts for, well, Canadian solar.

Provincial incentives allow Canadian Solar to sell energy for twice the price it receives from its solar farms in China. The Canadian incentives, an analyst told Bloomberg News, have set Canadian Solar apart from competing Chinese solar panel manufacturers. As the supply of panels has risen globally, the price of panels has plummeted almost 60 percent since 2011.

Canadian Solar and its partners are developing Canadian power projects with a total capacity of 496 megawatts, altogether worth some $1.7 billion. Key to that growth, the president of the Canadian Solar Energies Association told Bloomberg, has been a feed-in tariff (the FIT Program) that Ontario has offered since 2009 to guarantee above-market rates for solar and other renewable power sources. That and the pipeline of Canadian projects has tided Canadian Solar during the market swoon of the past couple of years.

With operations in 20 countries, Canadian Solar is a global concern — but in large part because of its profits in the Canadian market, the Ontario-based company was as of last week the second-best performing stock on the NASDAQ in 2013: Its stock (CSIQ) has surged nearly ninefold to crack $30 in the calendar year.

The pipeline of Canadian energy it has established makes the company a darling for investors at the moment. Bloomberg quotes a Singapore-based analyst's recent note to investors calling Canadian Solar "the best-positioned solar company for growth in profitability," with a 12-month target price of $42.

One hitch in Canadian Solar's rebound could be competition from traditional power sources, according to a recent analysis by Zack's Equity Research that stated "harsh competition from natural gas and coal might be an overhang on its operations."